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Nvidia Short Sellers Lose $2.3 Billion in One Day as Stock Soars (bloomberg.com) 108

Traders betting against Nvidia suffered massive losses as the chipmaker's stock surged to a record high after it forecasts sales that far surpassed the average analyst estimate. From a report: Short sellers are facing $2.3 billion in paper losses on Thursday alone amid the tech giant's 27% intraday jump, data from S3 Partners LLC show. That's pushed mark-to-market losses for the contrarian traders to $8.1 billion in 2023 as Nvidia's price has more than doubled this year.
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Nvidia Short Sellers Lose $2.3 Billion in One Day as Stock Soars

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  • by drhamad ( 868567 ) on Thursday May 25, 2023 @02:26PM (#63550943)
    This is my sad face... I'm so sad. It makes me so sad that people betting against companies lose money. Wahhhhh /s
    • by Tablizer ( 95088 )

      Rich people "problems".

    • You can't have longs without shorts. Someone has to take the other side of the position.
      • by drhamad ( 868567 )
        That's entirely untrue. This isn't gambling. Shorts are relatively new. Typical stock transactions are just a willing buyer and a willing seller. No one has to lose. And if you do lose it's just because you decided to sell when price was below what you bought for. Shorts are an entirely different thing. Shorts are betting on a companies stock failing, and doing it by borrowing a stock. You don't even buy the stock (initially).
  • Can it sustain? (Score:5, Insightful)

    by SuperKendall ( 25149 ) on Thursday May 25, 2023 @02:28PM (#63550953)

    I never get tired of seeing shorts crushed, however I don't see how there's any way a company can have a sustained P/E above 200(!).

    Even if you accept years of coming growth due to AI, that's just insane.

    But, the stock market has not really been tied to value for some time now, so it could have a lot of room to run, that's why even though I can't see that price lasting I still would not ever short it.

    • Re:Can it sustain? (Score:5, Interesting)

      by istartedi ( 132515 ) on Thursday May 25, 2023 @03:11PM (#63551047) Journal

      I turned up my nose at Amazon for similar reasons, it was never even making profit for a long time. Turns out they were making all the right investments instead of booking profits; but it's the exception that proves the rule. Statistically you're right about NVDA; but those outliers always sting when you sit there and think about what might have been, so don't do that.

    • by CAIMLAS ( 41445 )

      So what you're saying is that right now would be a good time to short?

    • by Anonymous Coward

      Math explains it. 15% growth every quarter for 10 years would do it. Now if you aren't seeing that, combined with the stock not going up any further, then yeah that P/E is kind of unreasonable.

    • That PE is unsustainable. Unless you only have two competitors, and they only compete to see who can punch themselves harder in the dick.

  • by muh_freeze_peach ( 9622152 ) on Thursday May 25, 2023 @02:29PM (#63550957)
    They literally just shit all over themselves with the 4x series, sales are waaaay down and no one is gonna buy a 4060ti. So again, I say, huh?
    • by Anonymous Coward

      Sales and prices on the rise in the enterprise space. Whether is makes sense or not everyone is clamoring to setup AI nodes.

    • Basically they promised $11B in the next quarter as a footnote on an earnings report, the best they've ever done is 8. They have a glut of inventory and they said "AI" approximately 137,000,000 times - we'll see.

      • by CAIMLAS ( 41445 )

        Literally every hosting/MSP/colo provider is scrambling to get more GPUs right now. The demand far outstripes supply, at least within the datacenter context.

        Basically, it's GPU mining all over again, but with much deeper pockets.

    • Re:What? (Score:5, Funny)

      by gardyloo ( 512791 ) on Thursday May 25, 2023 @03:22PM (#63551077)

      Literally?

    • NVidia doesn't really give a damn about consumer GPUs anymore. The real money is in data center GPUs for AI and data mining. They can charge 10 times as much for those products, and the owners of the server farms will happily pay for them.

      • Bingo.
        Without even batting an eye.

        It's because we've been conditioned to paying AMD and Intel $20,000 for machines about half as fast as the most recent desktop CPU.
        But whatever.

        If we're talking about insane fucking P/E ratios, AMD is over twice what NVDA is.
        The Hopes And Dreams sell shares. Always been that way. Always will be that way. Gotta get them stonks.
      • NVidia doesn't really give a damn about consumer GPUs anymore. The real money is in data center GPUs for AI and data mining. They can charge 10 times as much for those products, and the owners of the server farms will happily pay for them.

        AI processors are less complex than GPUs and their associated graphics stacks making them inherently more of a commodity item.

        Given AI specific competition in the pipeline any short term gouging is not likely to last all that long and may be counterproductive as cheaper alternatives are sought.

        Having said that so long as current trends in increasing AI capabilities hold it will be impossible for industry to keep up with demand.

    • Wall street does not care if consumer side(smaller margins) is dieing if the business side (bigger margin) is booming.

      Same for AMDs CPUs, consumer side may not do very well, but if they capture more of the DC market, wall street is happy.

  • by rsilvergun ( 571051 ) on Thursday May 25, 2023 @02:31PM (#63550961)
    PC sales might be down (and GPU sales ain't lookin' good) but AI runs off GPUs. How can you possibly be that stupid? Or are these just really old positions?

    Either way, short selling should be illegal. If you risk $2.3b dollars you're gonna do whatever it takes to not lose that money.
    • With limited upside and unlimited downside. The good ones are fucking heroes with massive balls doing the extremely hard and dangerous work while getting treated like absolute shit for it.

      If you haven't seen it, I highly recommend The China Hustle [imdb.com] 2017 documentary about Chinese fraud companies, which has Carson Block from Muddy Waters [muddywatersresearch.com] - one of the best Short Sellers out there.

      I have never shorted anything but I read a lot of reports - they do great work.

      • that doesn't really seem to sell me on the idea. It's far more likely that Short Selling will be used to undermine legitimate companies. And even when you do get a short seller taking down a bad company you've still got a mountain of losses. The solution isn't vigilantes, it's better regulation.
        • by e065c8515d206cb0e190 ( 1785896 ) on Thursday May 25, 2023 @03:03PM (#63551029)
          You mean regulators like the ones overseeing Silicon Valley Bank? First Republic? Silvergate? Yes, clearly, we need more of those.
          • It's not the job of regulators to ensure no bank can ever fail. The job of regulators is to make sure banks can't dig themselves into a hole and then disappear leaving depositors and/or taxpayers on the hook.
          • and slashing their budgets then yeah, that stuff wouldn't happen. Trump & his Republican Congress repealed Dod Frank. They did it in pieces so that they could technically leave the law in place while eliminating all it's major provisions.

            You voted for less regulation and you got it. What in the name of God did you think was going to happen?

            Regulations are put in place for a reason. And every time we do your side comes along, says "We need to unleash the power of our economy! The problem isn't ha
            • Forget what you think you might know about me. First of all, it's spelled "Dodd-Frank". Second, the fact that you entrust this guy [nytimes.com] with effective legislation is sad. I'm in favor of regulation. Not stupid ones.

              And because this is not the first time you and I interact on this topic, let me drive you through this thought experiment. I'm going to assume for a minute that your arae of expertise is big tech (because let's face it, this is Slashdot, but my reasoning also applies if your expertise is energy, const

        • Are short sellers taking down a company, or merely betting against it? Short sales are already inherently risky - you're borrowing stock to make it work, and if the price does not fall then you're on the hook for it (most have sell orders in place to limit losses).

          When it's an investment bank using other people's money, then regulators already watch short sellers very closely.

          • by Luthair ( 847766 )

            Short selling incentivizes people to find problematic companies and as such as resulted in uncovering massive fraud e.g. Enron, Wirecard, Biovail, etc.

            We need short sellers to balance out Stans who have a financial interest in shilling for the stocks they're invested in - see also Tesla.

        • by waspleg ( 316038 )

          You'd have to undermine the regulatory capture. It's a revolving door between the regulators and Wall Street.

          Considering Congress can effectively do whatever insider trading they want under the regulations they helped write for themselves to - which aren't the same ones as for you and I, good luck with that shit.

        • That's cos you don't know what you're talking about. I'm not saying this to be a dick but you can't have long bets without short bets. The market needs short bet ls - at least in 2024 - because its one of many instruments used in speculation.

          personally I think the whole fucking stock gambling economy should be banned or strictly regulated. That so many cryptocoins have turned out to be scams when all of us smart people said "that's just an unregulated security" is damning proof of this.

    • Remember, you can't ban the truth.
    • Retail punters tend to bet huge amounts around company earnings. Which were last night for Nvidia. So this is clearly nothing unusual. People lose/make similar amounts around earnings from other popular (FANG) companies
    • by Tablizer ( 95088 )

      Regular stocks have the same problem. I can rework your sentence as such:

      "Stocks should be illegal. If you risk $2.3b dollars you're gonna do whatever it takes to not lose that money on that stock."

      • What should be illegal is investment without responsibility.

        The point of the stock market is that it separates investors from liability for the actions of corporations, which makes it possible to knowingly, willfully, and deliberately profit from criminal activity.

        Investors should share the blame, and the penalties, for the criminal actions of those businesses in which they invest.

        • Investors should share the blame, and the penalties, for the criminal actions of those businesses in which they invest.

          Only insofar as they have a say in the way business is conducted, the ones in charge are the ones that should get the penalties. Typically that's not the investors, even with voting shares there's no ability to choose the path of criminal activity for the company.

          • Only insofar as they have a say in the way business is conducted

            They can choose to invest, or not.

            • You assume they get enough data to make an informed decision. At that point, the feds should already march in. Remember, most investors are just part of the general public. Who are really not in the know about shady business practices of traded companies.
              • Where you invest has consequences. Having the system be designed to protect people from responsibility for causing harm has consequences. Look around, here they are.

        • Lol you're cute. Is capitalism also the only vehicle for innovation?
          • by Tablizer ( 95088 )

            It may be the best because the greedy find a way to steal the best ideas (without paying), whereas before they often just sat around in a monk's drawer.

    • Either way, short selling should be illegal.

      There's literally no way to make short selling illegal without demolishing the concept of trading. A short sell is a private bet between people one of whom owns stock. The principles behind short selling are not to different from those of giving a loan, or more accurately any kind of futures commodity trading. To make them illegal you'd need to literally upend 100s of years of contract law.

    • Re: (Score:2, Insightful)

      Either way, short selling should be illegal.

      That is insanity.
      How the fuck do you go about regulating that?

      Josh, you can't borrow shares from Bob and then sell them.
      Or do we stop Bob from loaning you those shares?
      Bob, you can't loan people shares if they're going to sell them.
      Do we block the act of loaning?
      Josh, and Bob, we prohibit you from letting someone else use your property with your consent.

      You want to ban free agency and the very concept of contracts.

      You don't like that people betting against you looks bad. But ultimately, if they'r

    • Short options have value as a kind of insurance. Maybe I have a contract to sell a billion dollars worth of stuff to a company, but if they go TU I am hosed. I can buy puts as a kind of insurance. If their stock goes to zero it would cover my loss. Or as a farmer you would by puts on grain futures or whatever so if there is a bumper crop and prices drop you don't go bankrupt.
  • by laughingskeptic ( 1004414 ) on Thursday May 25, 2023 @02:37PM (#63550969)
    Most shorts are borrowed without people's knowledge from accounts where they are holding stocks with the expectation that the shares will increase in value. Brokerages make money allowing these shares to be "borrowed" for short sellers to bet on the opposite outcome and very often these bets have the effect of driving down the share price. Brokerages are providing services that put clients in direct conflict ... and the clients are largely unaware. https://www.sec.gov/comments/4... [sec.gov]
    • by e065c8515d206cb0e190 ( 1785896 ) on Thursday May 25, 2023 @02:43PM (#63550985)
      Usually you can configure you securities lending preferences at your brokers. But that's a separate discussion from how ethical short selling is. I know this is controversial, but remember there is no such thing as -1 Disagree. People tend to want to ban short selling when the truth is inconvenient, regulators and government do it when they messed up so bad that the markets are upside down. A willing seller meets and willing buyer and here we go. Short selling is clearly not a sure bet to drive down a stock price, remember GME and AMC. History is littered with people losing their shirts in short squeezes (Volkswagen is a memorable one).
      • by larryjoe ( 135075 ) on Thursday May 25, 2023 @02:55PM (#63551015)

        But that's a separate discussion from how ethical short selling is. ... Short selling is clearly not a sure bet to drive down a stock price, remember GME and AMC.

        The key problem with short selling is that some of the short sellers will attempt to influence the market. It like the pump and dump influencers but reversed with dump and deflate. There is a strong incentive to deflate the stock. Sometimes that means pointing out all the real weaknesses in the business, and sometimes that means making stuff up.

        An analog to this (that is not exact) is perhaps sports gambling where gamblers try to influence the game.

        The other problem is that an idealist view of the stock market is that increasing stock prices incentivizes companies to do well and that performance then benefits society. If you buy into that idealism, then short selling fights against that incentive.

        • Agreed, that is a conflict of interest that you need to mitigate to ensure the integrity of the market. Hence The Downtick Rule [investopedia.com]. I wonder, should we feel the same way about r/wsb folks overtly attempting to push a stock price up with their buying of GME/AMC back then? I agree you want to mitigate price manipulation, but it has to be both ways.
        • Can you point to an example where someone made something up about a stock in order to drive it down and profit from a short position? For the life of me, I can't think of a single example.
          • by Ed Tice ( 3732157 ) on Thursday May 25, 2023 @03:16PM (#63551057)
            That's called "short and distort" and, yes, it happens all the time. Here's an example. https://www.fool.com/investing... [fool.com] It happens all the time and it's legal as long as you disclose that you are short the stock.

            Short-sellers drive down the price of a stock short-term but if you are looking to invest in that stock it's great because it means you get a lower price as a buyer.

            The thing to remember is that you can always control your *entry* price to a stock (set a maximum price you are willing to pay when buying) and timing, but you can't control your exit price and timing. Part of investing is knowing that the price might go down long-term due to problems with the business or short-term due to market factors (like short-selling) unrelated to the business and you need to plan for that when investing.

            • In the example you bring up (USB), where's the lie/distortion? Should we ban all financial analyst reports where they produce below average outlooks for a company (yes, notice the irony of banning all below average...)? Do you think people were wrong to point out to issues in the regional banking sector in Q1? Have they not been vindicated?

              Also as a side note regarding your control comment re exit price: you can achieve the desired behavior with options. Say you own one share of Nvidia (currently trading at

              • Having options on either side can limit your downside but, as you have pointed out, it also limits your upside. That's an individual investment strategy question.

                Admittedly, in your post, you talked about "made something up" where I showed an example of something with which most of us will agree. In a "short and distort" scenario, "making something up" is illegal. But what you do get are opinions based on unverifiable (or refutable) facts and those are, for practical purposes, "made up" but they are le

          • A lot of the anti-Tesla hype a few years ago was ridiculous or at least highly biased, and driven by short sellers.

            • by e065c8515d206cb0e190 ( 1785896 ) on Thursday May 25, 2023 @03:31PM (#63551089)
              The question is, do you think it's manipulative to point out say, that Tesla has the same market cap as the next 10 carmakers, and that this seems to high? What part is/was deceitful in the arguments from the short side, and therefore could be an indication of intent to manipulate?
        • The key problem with short selling is that some of the short sellers will attempt to influence the market. It like the pump and dump influencers but reversed with dump and deflate. There is a strong incentive to deflate the stock. Sometimes that means pointing out all the real weaknesses in the business, and sometimes that means making stuff up.

          As you note, it's precisely the same incentive that comes from holding a stock hoping its value will go up.
          And yes- it's precisely like the influencer pump and dump shit. Those guys are toeing a legal line, and they know it.
          Short and distort are people toeing that same line.

          It seems to me what you really need to regulate are stupid people playing in the market.
          If only we had a way to do that. [investopedia.com], and a whole group of people with that exact certification letting the plebs play with tools they don't fucking

        • contrary to typical shady practices, big short sellers always make it clear they wish to see the stock nosedive.
          So what's the problem?
          BTW, "deflate": for markets to reach equilibrium, any inflated stuff should be deflated, no?
          (And sorry, the sports betting analogy is completely wrong - the reasons are obvious.)

        • You are ridiculously bad at thinking. The same is true of folks betting on companies succeeding, complete with market and media manipulation. I'm pointing out your thinking failure because it's not an understanding of fact that has led you astray, it's your commitment to bad ideas and incoherent philosophy.
    • I'm given to understand they can't borrow from cash accounts. If you don't want shorts borrowing your shares, don't open a margin account. Margin is mostly a portfolio mine field anyway, and infamously opened people up to "rehypothecation" during the '08 financial crisis. I don't know to what extent those people were ever made whole, if any; so I say run, Run, RUN from margin accounts. The fact they handed them out like candy on Robinhood was always very concerning.

      Now if they're borrowing from cash acc

    • You just described the fundamental principle of banking.

    • Such a conflict of interest should absolutely be regulated. That's vile.
      However, the practice of short selling in general is not that.

      That bullshit you describe is just another step in our Holy Quest to make sure the Gubmint can't stop anybody from finding new and exciting ways to fuck the plebs out of their income and savings, since that's the actual fucking fuel of the economy.
    • The entire field of speculation is unethical. Why do you think the SEC exists and is always a target for folks opposing regulation? Slashdot used to be populated by folks who were at least decent at thinking.
  • $400 for 8GB ?

    On a 128-bit bus ?!

    In 2023 ?!?!

    F%$k that.
  • So AI is the new paradigm, it's gonna do everything cool from sliced bread to arse tickling dildos...time to exit the hype train. Short sellers have nothing more to lose on this BS.
    • Just mentioning AI seems to cause the price of a stock to take off. If you are a brave short seller (I am not) you can capitalize on this by shorting those stocks.
      • by Bahbus ( 1180627 )

        Stupid, not brave. All short sellers are stupid. Doesn't matter if they make money or lose money, they are stupid people who do not deserve any trust.

  • by locater16 ( 2326718 ) on Thursday May 25, 2023 @03:03PM (#63551027)
    Why on earth would you short sell the company that is clearly riding today's silicon valley hype wave? It's like expecting stock in vaccine makers to tank during the pandemic. Like sure, they'll come back down to earth once everyone's sobered up, but for fucks sake, now???
    • by smap77 ( 1022907 )

      When the hype wave crashes, you'd like to have shorted the stock, now, wouldn't you?

      Shorting is simplest way of making money when stock markets go down. The bet is on when that slide happens. And how much it costs you to get there.

      • by Bahbus ( 1180627 )

        It's also an extremely stupid practice and not a real job.

        • Raise your hand if you have no idea what the fuck short selling is.

          Hint- that's you.
          .
          Describe to me exactly what you think is different about betting on a stock to go up, vs. betting on a stock to go down?
          • by Bahbus ( 1180627 )

            Ah, see, here's the thing, dumbfuck, the entire existence of stocks and stock markets is stupid. Anything to do with stocks is not a real job. It's all a scam through and through at every level. Anyone who knows anything about stocks knows it's a scam. I don't participate in known scams or collude with those who do, but I'm guessing you're still stupid enough to do so based on this reaction.

            • Ah, see, here's the thing, dumbfuck, the entire existence of stocks and stock markets is stupid.

              You just called me a dumbfuck, and your argument is "The entire existence of stocks and stock markets is stupid".
              lol. Nice one, smart guy ;)

              Anything to do with stocks is not a real job.

              You still haven't successfully argued why that is.

              It's all a scam through and through at every level.

              I posit a different theory- you lack the quantity of brain cells to understand its most basic concepts of operation.

              Anyone who knows anything about stocks knows it's a scam.

              Are you really on some internet forum full of nerds throwing around arguments as fucking stupid as "anyone who knows anything..."

              I don't participate in known scams or collude with those who do

              I suspect that's because Gas Station attendant wages just haven't reached a

              • by Bahbus ( 1180627 )

                Which is only something a scammer says. Congrats. You've been scammed into being another scammer. Yeah, you are a dumbfuck. No two ways about it.

                • What the fuck are you talking about.

                  Scammer? It's what simple math says, you fucking imbecile.

                  If you take your money, and you put it in a checking account, do you know how much it's worth next year? 4% less than it was when you put it in there.
                  If you take your money, and you put it in a savings account, do you know how much it's worth next year? 3.8% less than it was when you put it in there.
                  If you take your money, and you put it in mutual funds, do you know how much it's worth next year? 20-25% more,
                  • by Bahbus ( 1180627 )

                    Yeah, not interested in the blind scammer's sad excuses.

                    • You'd be less annoying if you at least used words correctly.

                      I mean "scammer"? Really?
                      You think math, or the world, gives a fuck what you do or don't do with your money?

                      If you're the kind of fucking moron who thinks "the stock market is a scam"- that's fantastic.
                      It's not like the next generation isn't going to need someone to wait tables all of a sudden. Way I see it, you're doing the economy a favor by making sure we continue to have cheap unskilled labor.
                    • by Bahbus ( 1180627 )

                      The way I see it, your entire existence is parasitic at best. Parasites will be eliminated.

                    • The way I see it, your entire existence is parasitic at best. Parasites will be eliminated.

                      Because I put my money into mutual funds which use that money to make strategic investments in businesses that are successful and give me (most of) the proceeds?
                      You are, I think, confused about the word "parasite".
                      Now the real question, though...
                      Do you not have a 401K/Roth?
                      Are you also not a parasite?

                    • by Bahbus ( 1180627 )

                      Nope. Don't need one and you're boring me.

                    • Oh fuck, lol.
                      How the fuck are you posting online from Skid Row, man?
                      Am I buying you guys cell phones these days?
  • by kyoko21 ( 198413 ) on Thursday May 25, 2023 @04:08PM (#63551159)

    Is it really investing or is it just gambling at this point?

    • Some of the hottest investment areas lately are chips and electric cars. There is a huge need for additional capital to build new mines, factories, foundries, and supporting industries such as machines for production lines, and car charging stations. So I don't know how you can say that's not real investment.
    • Investing is nothing more than gambling with information.

      • s/ with information/./

        Gamblers believe they have information too, or think they have a system. There's no prediction that's cool proof. There was a thing about playing what AI was going to do, but that didn't last long either. Investing is gambling, that's why you should never invest more than you can afford to lose. You might need the money back when the stocks are down, only invest if you know for certain that you're not going to need to spend on house repairs etc.

    • Comment removed based on user account deletion
  • Not that their pricing doesn't justify pushback, but I'm now thinking some of those the most prolific in damning nVidia's cards like the RTX 4060 ti with its anemic 8 GB of vram were also short selling nVidia's stock.

    • I can't speak for anyone else, but I don't have any nvidia stock, and I have been non-literally shitting all over nvidia for their budget cards which have no reason to exist except to fleece suckers.

      VRAM is only becoming more relevant, you could get away with 4GB for ages but now even 8GB is not enough.

  • Every time they release a new video card, Slashdot is full of comments from people who trash the MSRP with statements like "Overpriced, nobody is buying their product". I also like the ones that are along the lines of "crypto mining is dead, so they should reduce prices to sell their overstock because nobody is buying their cards".

    Yet here is NVIDIA, reporting double the amount of profit by selling higher priced cards at a lower quantity. Seems like their business model is doing just fine. People complainin

  • ...going to force everyone to sell to save the short sellers from making a bad gamble, again?

    When I worked on Wall St, even the mob run chop shops ripping people off all day turned their noses at short sellers. I once asked what was the difference, and the dude was like 'we rob rich people, they rob everybody'

  • ... you better be prepared to get squeezed.

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